Philips shuts down business electronics division

By Jana Sanchez, Computerworld |  Business

Philips Electronics NV is closing its business electronics division in a move
that reflects both a shift in the market for the Dutch company's electronics equipment
and a desire to trim costs.

Sixty percent of the division's business will be transferred to the vendor's
consumer electronics division, and the remaining business will become accountable to
the head of the company's semiconductor division, confirmed Philips spokesman Ben
Geerts today. "All the activities of the division will continue to exist," he
confirmed.

The reorganization is likely to result in job losses, particularly in the management
ranks, confirmed Geerts. "It's too early to say if people will lose jobs, but in the
management and support of this division worldwide, we do not exclude the possibility
that there will be job losses," he said, adding that he couldn't give specific numbers.
About 14,000 people are currently employed in what was previously the company's
business electronics division.

The main reason for today's decision is that many of Philips' business electronics
products are now becoming consumer products, Geerts said.

Using the example of fax machines, he explained that electronics products once sold
to businesses are now common consumer goods that need to be sold through consumer
channels. However, Philips isn't moving completely out of the business electronics
market, Geerts added. "If you sell to consumers, it doesn't mean you don't sell to
businesses," he said. "We have our channels in the business-to-business world."

All of the business electronics division's products, except for digital video
communication systems (DVS), which include set-top boxes for Internet access, are
profitable, Geerts said. However, the likely upturn in demand for set-top boxes for
interactive TV gives Philips reason to be optimistic about DVS equipment. "We think DVS
is a very promising area," Geerts said.

The recent departure of Philips Executive Vice President Roel Pieper was irrelevant
to the restructuring decision, which was made after Pieper left the company, Geerts
said. The head of the business electronics division , however, reported to Pieper.

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